A British hedge fund burned by the collapsing financial services sector has lost more than three-quarters of its value this year, and is down 85% since its inception two years ago.

SRM Global, founded by UBS veteran Jonathan Wood, was down 77% through July. The once-US$3 billion hedge fund—one of the largest European hedge fund launches ever—fell 34% last year, The Wall Street Journal reports.

SRM was wracked by its investments in financial services firms, notably the doomed Bear Stearns and Northern Rock, as well as battered mortgage firm Countrywide Financial Corp. Wood was an outspoken activist at Northern Rock and Countrywide, battling the former’s nationalization and the latter’s takeover by Bank of America. It was its largest outside shareholder in Northern Rock, and owned more than 8% of Countrywide.

Wood’s plans for SRM are unclear. Investors agreed to a five-year lock-up, making them unable to demand what’s left of their money back for at least three years.

From the current issue of

The ratio calendar combination spread couples two ratio calendar spreads, one using calls and the other using puts. The call strike prices are higher than the put strike prices. This strategy is complex and profit is limited, but if a high amount of time value is involved in the short positions, that profit can be substantial and risk is still limited.